Any tax reform that lowers the top rate and scraps deductions should be rejected

[Mr.Phips]

Both of these things simply lead to more tax breaks for the rich, which is something that is not needed right now, when income inequality continues to mushroom.  

The middle class rely on important itemized deductions like the mortgage interest deduction, the state and local tax deduction, as well as the deduction for regressive property taxes that are paid.

A middle class family would be hurt far more by getting rid of the mortgage interest deduction far more than a multi-millianaire because the wealthiest people are far more likely to buy their homes with cash and even if they do have a mortage, the interest is almost always a far lower percentage of their income than a middle class taxpayer.  

Same with the property tax deduction.  Property taxes almost always make up a far higher percentage of a middle class taxpayer's income than that of a wealthy taxpayer.  

What should be done is to lower rates for the middle class(those earning under $100,000 a year) and create a 50% top marginal bracket for those making over $5,000,000 a year.  Additionally, I would propose taxing capital gains and dividends at the same rates as ordinary income.  

The corporate side is where I would lower the rates.  Taxing dividends and capital gains at the ordinary levels for individuals pays for this along with a heavy excess retained earnings tax(to discourage cash hoarding).

Any tax "reform" that lowers the top rate and eliminates needed deductions should be blown up by Democrats.  

[Mr.Phips]

I am mixed on this one, honestly. The top marginal rate you mentioned sounds good, and I'd be eagerly willing to go along with your proposals for capital gains and dividends provided no strong counterarguments pop up, yet I do not feel the middle classes are paying enough in tax right now and would be alright with eliminating most if not all deductions.

The middle class is very squeezed and has seen their income after inflation and compared with the wealthy, drop considerably since the early 1980's.  They need a break.  Ideally, those making under $50,000 would be paying basically no tax.  This would be done with a combination of lower bottom rates and increased standard deductions and dependent and personal exemptions. 

[Mr.Phips]

Deductions are worth far more to me than you guys out of box. The higher your tax rate, the more the value of the deduction. Heck maybe close to half of taxpayers get no deductions, because they claim the standard deduction. The whole thesis here is flawed. The middle class in the US is one of the most "under-taxed" in the world by the way, which is in part generating the fiscal crises, but I digress.

Dumping deductions, while lowering rates also leads to less tax incentives to make economically inefficient decisions, because the cost of the inefficiency is less than the value of the deduction favoring such inefficiency. Thus more buy homes than they "should." More invest in real estate than they "should." Charities are subsidized. And the cost of farmland is inflated.

Someone earning $10,000,000 a year's deduction are going to be a far smaller percentage of their income than someone making around $50,000 a year.  Someone making $50,000 a year is going to have to have about $10,000 a year in mortgage interest, which is about 20% of their income, while someone making $10,000,000 a year couldnt possibly have more than $70,000 a year in mortage interest and even that would be less than one percent of their income.  Same with the property taxes.  Homes have a finite value, while income doesnt. 

[Mr.Phips]

And therefore ... ?

The middle class would miss these deductions far more than the wealthy.

[Mr.Phips]

And therefore ... ?

The middle class would miss these deductions far more than the wealthy.

That is indubitably true - unless offset by lower rates. However, the pension plan rules are pretty heavily skewed in favor of high income earners (an above the line deduction), along with to a lesser extent, the deduction for state income taxes, until you hit really high levels of income, and such deductions are phased out.

Pension plan contributions are limited to about $18000 a year and Ira deductions are limited to $5000 per person. 

Lower tax rates would just add fuel to the fire of the problem by giving the wealthy a further benefit.  In a addition to losing a deduction that didn't mean much to them anyway, they get their rates lowered.

[Mr.Phips]

How about a 9.75% sales tax rate nationally and no income tax?

Better yet just take the working poor out behind the barn and put a bullet in their head?  A tax is money government collects from the citizens.  If you total all the taxes paid you will find in many instances the US taxation system is actually regressive.

You must be logged in to read this quote.

http://thehill.com/blogs/on-the-money/domestic-taxes/280027-study-state-tax-systems-regressive

The United States due to the way it is set up allows politicians to play these numbers games with taxes.  But once you take into account ALL the taxes a working family pays you can see just how raw the deal is.  Sorry for not using a better source.  Strangely no one really wants to talk about this elephant in the room.

And these taxes arent even deductable on their federal return, unless they can itemize and their state income and property taxes happen to be lower than the sales taxes that they paid.